Kuaishou shares triple in biggest tech offering since Uber

HONG KONG • Technology, the operator of China’s most popular short-video service after ByteDance’s Douyin, jumped 194% in its Hong Kong debut yesterday, after a US$5.4 billion (S$7.2 billion) initial public () that drew orders worth hundreds of billions of dollars.

The shares opened at HK$338, against the IPO price of HK$115, valuing the Tencent Holdings-backed firm at US$179 billion. The shares sold at the top of their price range in a deal that ranks as the world’s biggest Internet IPO since Uber Technologies’ US$8.1 billion share sale in the US in May 2019.

That spectacular rise confers on Kuaishou a price tag rivalling ByteDance – which last sought funds at a US$180 billion valuation – and ushers the nine-year-old video app into the ranks of China’s largest tech corporations. Once known for peddling quirky depictions of rural Chinese life, Kuaishou cements its place among a generation of mega start-ups like food delivery giant Meituan and ride-hailing leader Didi that grew up in the years after Alibaba Group Holding and Tencent.

If the gains hold, that would give Kuaishou the second-best debut ever for an IPO over US$1 billion in the world, data compiled by Bloomberg shows. It joins an already long list of floats that have popped on their first day of trading in recent months amid a glut of liquidity and ultra-low interest rates.

Morgan Stanley, Bank of America and China Renaissance were joint sponsors of the deal.

The stellar debut will be an encouraging sign for larger rival ByteDance, which is said to be in talks to list some of its assets in Hong Kong. Long a rumoured IPO candidate, the TikTok owner was bogged down last year in fighting a US ban on its globally popular app after being labelled a national security threat.

“A successful listing by Kuaishou will pave the way for its larger rival,” said Bloomberg Intelligence analyst Vey-Sern Ling. “Douyin will be more motivated to come to the market and investors can get better insight into China’s short-video industry with Kuaishou’s regular disclosures going forward.”

Kuaishou’s coming-out party broke records in Hong Kong for the number of retail investors subscribing to its shares and the amount pledged in the process. About 1.4 million retail investors – one out of every five people in the city – submitted HK$1.26 trillion (S$218 billion) of orders, while institutional buyers stumped up almost US$200 billion.

The demand matched the frenzy for the Hong Kong leg of Ant Group’s mega IPO, which drew in HK$1.3 trillion of bids for its retail tranche, before the planned US$17.2 billion offering collapsed.

“Growth tech companies are still very much in demand,” said Mr Gary Dugan, chief executive at the Global CIO Office in Singapore. “With the world still struggling with the Covid crisis, investors remain focused and investing more in tech stocks that have a strong growth story. Hence, we expect demand for these types of IPOs to remain strong and likely early trading share price premiums to tend to be extraordinary.”

Founded by former Google employee Su Hua and his friend Cheng Yixiao as an app built around sharing animated GIF images, Kuaishou pivoted to short video in 2013 and added live streaming in 2016, landing footholds in what eventually became two of the hottest social media formats in the world.

At the opening price HK$338, the net worth of Mr Su has soared to more than US$21.1 billion and Mr Cheng is worth US$14.7 billion. The fortunes of two other executives were also lifted to more than US$3 billion.

The firm had 264 million average daily active users on its main Kuaishou app as at last November, according to its prospectus, fewer than half the 600 million on Douyin. Still, it is growing fast.

Revenues climbed 49 per cent to 40.7 billion yuan (S$8.4 billion) in the first nine months of last year, after the company ratcheted up monetisation efforts through advertising and e-commerce. While Kuaishou offers free access to its main platform, the start-up takes a cut of the tips users give to their favourite live-streamers who perform viral challenges, lip-synch to the latest pop songs and play video games.

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